The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

This report presents the results of a follow-up audit of the Employment Development Department (EDD) related to a recommendation made in 2012 by the California State Auditor (state auditor). In March 2012 the state auditor issued a report titled Federal Workforce Investment Act: More Effective State Planning and Oversight Is Necessary to Better Help California’s Job Seekers Find Employment, Report 2011-111. The 2012 report included a recommendation aimed at ensuring EDD maximizes grant funding opportunities related to workforce investment.

This report concludes that EDD, in response to our recommendation, updated the grant seeking procedures it uses for identifying, reviewing, and choosing whether to apply for federal discretionary grant opportunities related to workforce investment. However, it did not consistently prepare executive summaries that include the factors it considered, record its decisions whether to pursue or forgo grants, or retain supporting documentation as its procedures require. Specifically, EDD did not prepare an executive summary for three grants for which it was eligible to apply. For four other grants EDD prepared an executive summary, but either did not include the factors it considered in making its decisions about whether to apply, its decisions about whether to apply, or both. We also identified three grants for which EDD was eligible to apply that it did not include on its Grant Research Tracking Sheet.

Additionally, during our review we found that the California Workforce Investment Board (state board) also researches potential grant funding for workforce investment and that the state board and EDD are in the process of formalizing policies that will delineate each entity’s role in seeking grant funding. However, the state board currently lacks a formal process for identifying and evaluating grant funding opportunities and does not track or consistently document the results of its efforts. Specifically, the state board provided documentation indicating it considered applying for two grants, but could not explain why it ultimately chose to forgo these opportunities. Only after making inquiries of EDD were we able to obtain documentation supporting the state board’s decision.